Sudden Wealth – What Should You Really Do?
Coming into wealth as a result of a divorce, inheritance, windfall or death can throw even the most grounded person into a spin. Just as you’re trying to process the emotional and legal sides of a major life event, you also need to be considering complicated investment possibilities. It can be very overwhelming.
Consider these suggestions if you are faced with an overnight financial change.
Don’t Rush In – Resist Your Impulses
It will be tempting to go out shopping for the latest sports car, pay off your mortgage or buy your family and friends everything their heart desires, but it pays to give yourself some time to think. Don’t make any sudden moves lead by your heart rather than your head.
Consider speaking to a financial expert, even if it’s only for some general advice. Your money does not have to be invested tomorrow. Establishing a plan ensures you will be better off in the long term, while not missing out on the short term pleasures.
Outlining A Planned Approach
This may not sound like the most interesting approach to money management, but it’s definitely the smartest. A financial plan that covers all the key elements, including current expenditure and life’s unexpected moments, really will help set you, and your loved ones, up for life.
Assess your current situation carefully and learn a bit about the benefits of allocating funds for debt reduction versus investing. You may also want to chat to a professional to find out how you may be impacted from an income tax perspective. Ensure your money is banked in an accessible account until your plan is locked in.
Maintain A Lifestyle That Suits You (and your newfound wealth)
Time and time again those who win a lottery or inherit find themselves penniless within a year or two of their windfall. It’s natural to want to enjoy your money, but don’t fall into the trap of blowing it all on lifestyle and having nothing for a rainy day.
If opportunity knocks and you find yourself in the position we all dream of, take a few deep breaths and make wise decisions that will keep your newfound wealth working for you.
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